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Huh?

This is CBS I On The World with John Bacheler. Here's John Bacheler.

The Russian economy severely sanctioned and yet...

Men such as Progoshin, the head of the Wagner Group, find a way.

All the attention from mutiny, talk of patriotism, talk of marching on Moscow

because men like Shoggo and the Gerasimov are misleading the people about the size of the success in Ukraine.

But I learned from a recent article at the Independent that Progoshin's real occupation is smuggling.

Gold smuggling, critical to keeping Russia's economy afloat.

The article suggests the economy is being kept afloat by critical gold smuggling operations by the Wagner Group.

The report by the Foreign Affairs Committee of the Parliament in the United Kingdom is smuggling that Progoshin is smuggling significance, quantities of precious metal out of Sudan.

Ah, you think to yourself, sit down, sit down. Did I hear about that recently? Yes, it's in a civil war between the paramilitary and the army.

In the meantime, Wagner has siphoned off large quantities, goes the independent, of gold to prop up the Russian economy which has been heavily hit by Western sanctions.

The future of Wagner is uncertain. Not with the gold holding. Michael Bernstom, the Hoover Institution joins me.

Michael, I remember many, many months ago at the beginning of the war, you said that what does Russia have for assets once the sanctions regime makes it impossible for them to withdraw their cash.

In the Russian, in overseas banks, they have gold in the basement of the Russian central bank.

But it hadn't occurred to me before that they're building their gold supply.

This gold fundamental to their economy, are they selling it or are they just holding it in the Russian central bank? What do we know?

Gold is extremely important by the day and by the months because the gold is owned by the sovereign wealth fund which is owned by the Russian finance ministry.

And this sovereign wealth fund is the only source to finance their budget deficit, which means the only source to finance their expenditures, to finance their war.

The Iranian capital is about 3.5% budget deficit and they're selling gold to Russian banks and Russian citizens and they're selling some abroad through United Arab Emirates and Dubai.

And this gold is important for them so they're buying gold from their own producers.

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